ANNUAL REPORT AS OF 31 DECEMBER, 2019 THAIVIVAT INSURANCE PUBLIC CO., LTD. - 2- CONTENTS Part 1 Business Operation Page 1. Policy and Business Overview 3 2. Nature of Business 3 3. Risk Factors 10 4. Business Assets 13 5. Legal Disputes 17 6. General Information 17 Part 2 Management and Corporate Governance 7. Securities and Shareholders Information 18 8. Management Structure 20 9. Corporate Governance 37 10. Social Responsibility 48 11. Internal Control and Risk Management 74 12. Related Transactions 76 Part 3 Financial Status and Operation Result 13. Key Financial Information 77 14. Report of Board Responsibility for Financial Report 81 15. Analysis and Explanation of Management Department 81 Accuracy of Information Acceptance 87 Attachment Attachment 1 Detail of Committee, Executives, Control Authority and Company Secretary 89 Attachment 2 Detail of Committee of Subsidiary Companies 102 Attachment 3 Detail of Internal Audit Head and Operation Compliance Head 106 Attachment 4 Detail of Assets Assessment 111 Attachment 5 Others 112 - 3- Part 1 Business Operation 1. Policy and Business Overview In 2019, the company got an outstanding development award of non-life insurance companies of the year 2018 and non-life insurance company that brought technology to the best insurance system of the year 2019 from the Ministry of Finance in Thailand Insurance Expo 2019, organized by the Office of Insurance Commission (OIC). The company also got the certificate from Thailand’s Private Sector Collective Action Coalition Against Corruption – CAC in the CAC National Conference Day 2019. Our company focuses on being a stable insurance company for Thai people. We have an asset management as sufficiently reserve money both for the debt and insurance contract obligation including Risked- Based Capital Maintenance according to the law. Therefore, we have a strong financial status for serving people. Moreover, we choose the risk management efficiently by focusing on quality underwriting together with competitive strategic adjustment by finding new marketing channels through the counter services or online. Simultaneously, we consider the people requirements by developing good insurance products and services. Besides the transparent management with corporate governance principle, our company also has participated in the Social Benefit Projects without expecting any profit such as, Micro-Insurance Project which is focused on giving insurance services with easy-to-access price for people and Rice Insurance Project with the government since 2011 which has been created income stability for farmers. There are 3 things of the company goal in operation: 1) Develop the company to have a strong financial status and management with good governance. 2) Develop valuable products to reduce risk and to alleviate properly people loss or damage. And 3) Develop standard service and create satisfaction fairly to our customers and partners. The company is ready to be the consultant of all insurances for customers and population by having veriousguidelines in organization development continuously, human and intellectual capital development, innovation development and operational process improvement to be standard and effective. 2. Nature of Business (1) Company background 8 October 1951 Registered to establish company with paid registered capital as Baht 10 Million in the name of Thaivivat Insurance Co., Ltd. with the purposes to operate non-life insurance business which primarily the company took only Fire Insurance and Marine Insurance. The head office was located at 2nd Floor B.L.Hua building, Wat Tuek Intersection, Bangkok with 9 company founders as following:- 1. Captain Somwang Sarasarn 2. Mr. Wai Wongtrakul - 4- 3. Mr. Siwa-aut Assawakiat 4. Mr. Kasem Pangsriwong 5. Mr. Ma Chunleng (Mr. Preeha Assawaintra) 6. Mr. Changtang Sae Bae (Mr. Sermsak Assawatorn) 7. Mr. Thong Assawarak 8. Mr. Tingkiang Sae Bae (Mr. Yon Assawathanakul) 9. Mr. B L Hua or Mr. Luehua Sae Bang 1973 To get the licensed Non-Life Insurance No.8/2516 issued by Insurance Office, Ministry of Commerce. 1974 To expand business of Motor Insurance and moved the head office from B.L.Hua Building to Tinnakorn Building Suriyawong Road Bangkok. 1975 To Open the Miscellaneous Insurance Department and provided for professional to be in charge of the operation. Meanwhile, the company expanded the business of various investments. 1980 For the rapid expansion, the company brought the computer system to be used in the organization for developing Information Technology System which was the crucial factor of management work in the present and expanded the Service Center to many provinces surrounded Bangkok for customers convenience such as Chonburi, Ratchburi, Saraburi and Nakornratchasima provinces. 1984 To Lease the radio broadcast frequency from CAT Telecom to take the modern technology for efficiency use of communication between Claim Staff and the company for a better facility to the insured. It was the first company to take this modern technology for the insurance work. 1989 From applying the new technology for our service, it made the company be chosen to receive the HI-TECH AWARD service. 2008 To take the new technology for Emergency Help Services on car accident 24 hours with Mobile Tracking System. 2009 To provide Helicopter services to evacuate emergency patient by air. 2013 Receiving the award of the insurance company with the excellent management in 2012 granted by OIC 2015 Receiving the award of the insurance company with the excellent development in 2014 granted by OIC 2017 Receiving the award of the Thailand ICT Excellence Awards 2017 in Innnovation Projects - 5- 2017 Receiving the award for the business ethics and good governance from the Thai Chamber of Commerce 2018 Receiving the creative technology innovation award in Thailand Insurance Expo 2018 2018 Receiving the award and certificate of innovation and innovative organization from National Innovation Agency 2019 Receiving an outstanding development award of non-life insurance companies of the year 2018 and non-life insurance company that brought technology to the best insurance system of the year 2019 2019 Receiving the certificate from Thailand’s Private Sector Collective Action Coalition Against Corruption – CAC in the CAC National Conference Day 2019 (2) Business Operation Non-Life Insurance business operation of Company can be divided as following 1. Motor Insurance 1.1. Compulsory Insurance according to the Protection for Motor Vehicle Victims Act 1992 1.2 Voluntary Insurance Class 1 1.3 Voluntary Insurance Class 2 1.4 Voluntary Insurance Class 3 1.5 Voluntary Insurance Class 4 1.6 Voluntary Insurance Class 5 2. Fire Insurance 3. Marine Insurance 3.1 Cargo Insurance 4. Miscellaneous Insurance 4.1 Personal Accident Insurance 4.2 Travel Accident Insurance 4.3 Health Income Compensation Insurance 4.4 Critical Illness Insurance 4.5 Contractor All risks Insurance 4.6 Contractor Plant and Machinery Insurance 4.7 Boiler Explosion Insurance 4.8 Public Liability Insurance 4.9 Golfer Indemnity Insurance - 6- 4.10 Neon Sign Insurance 4.11 Burglary Insurance 4.12 All Risks Insurance 4.13 Health Insurance 4.14 Global Travel Accidental and Health Insurance 1. Reinsurance is the important basic of insurance to help risk diversification by making reinsurance treaty with the reinsurance company. At the same time, we receive the reinsurance from other company as the risk diversification. Important changes of company Oct. 1951 Registered capital Baht 10,000,000 common shares, value per share is Baht 1,000.00 Jan. 1981 Increased registered capital to Baht 20,000,000 common shares, value per share is Baht 100.00 Nov. 1987 Increased registered capital to Baht 30,000,000 common shares, value per share is Baht 100.00 Jul. 1992 Opened head office at Dindaeng area, the 11-storey high building with usage area 5,596 square meters and parking area 3,320 square meters Oct. 1992 Increased registered capital to Baht 60,000,000 common shares, value per share is Baht 10.00 Nov. 1993 Registered as public company and traded in the securities exchange of Thailand. Jul. 1994 Increased registered capital to Baht 101,000,000 common shares, value per share is Baht 10.00 Jul. 1999 Increased registered capital to 126,250,000 Baht common shares, value per share is 10.00 Baht. The English company name was changed from Pacific Insurance Public Co., Ltd. to be Thaivivat Insurance Public Co., Ltd. Sep. 2003 Converted share value from Baht 10.00 to Baht 1.00 Apr. 2005 Increased registered capital to Baht 151,500,000 common shares, value per share is Baht 1.00 May 2015 Increased registered capital to Baht 303,000,000 common shares, value per share is Baht 1.00 (3) Revenue structure The company is a non-life insurance business to have the main revenue from insurance premium. When the company receives insurance premium, a part of it is taken to do the reinsurance and - 7- another part is kept for our own risk. For the part of our own premium after expenses deduction, the company makes investment to earn income according to the non-life Insurance Act and Office of Insurance Commission announcement about other business investment of non-life insurance company. Past 3 years of company’s income (Unit: Million Baht ) Separate Financial Statement Consolidated Financial Statement 2017 % 2018 % 2019 % 2017 % 2018 % 2019 % Underwriting income 2,737.3 96.6 3,217.3 99.1 3,733.7 96.2 2,737.6 96.5 3,219.8 99.1 3,736.3 96.1 Investment income 90.6 3.2 20.2 0.7 134.1 3.5 92.7 3.3 23.2 0.7 136.7 3.5 Other income 6.3 0.2 7.4 0.2 14.6 0.4 6.3 0.2 7.4 0.2 14.5 0.4 Total income 2,834.2 100.0 3,244.9 100.0 3,882.4 100.0 2,836.6 100.0 3,250.4 100.0 3,250.5 100.0 Business operation of each product line (1) Product or service characteristics There are 4 main services of company as follows: 1.